The Life and Death of Stalinism
Chapter 6
Stalinism and the Postwar World
1. THE DEFEAT OF THE WORKING CLASS
The destruction of the Soviet workers’ state led to the defeat of the proletariat’s revolutionary
challenge to world capitalism at the end of World War II. Postwar workers’ movements were
crushed or diverted into class collaboration, and third-world revolutions were led down the path
of bourgeois nationalism. As a result imperialism gained a new lease on life. Trotsky’s warning
(cited in Chapter 2) proved correct: equilibrium was erected over the prostrate form of the
defeated working class, leading to an unprecedented period of prosperity. The epoch of capitalist
decay was significantly prolonged.
On the surface it may not look like we still live in the epoch of decay. The first half of the
century — two devastating world wars, the Great Depression of the 1930's, the simultaneous
triumph of fascism and Stalinism — amply confirmed the epochal picture drawn by Marxists.
But history after World War II, with its expansive boom in the imperial countries and four
decades without inter-imperialist war, looks different. Even though the postwar boom has come
to an end and the possibility of severe crisis is now openly discussed within the Western
bourgeoisie, the predominant view — among the conservatized intelligentsia and proletariat as
well as the bourgeoisie — is that capitalism is successful. The collapse of the Eastern “socialist”
regimes provides confirmation.
In this chapter we analyze the post-World War II world, with special attention to the impact of
Stalinism on it. We will see that Stalinism played the key role in keeping imperialism strong. We
take up in turn the origins of the postwar world, an assessment of modern imperialism as a
whole, and finally the rise and decline of the Stalinist form of imperialism.
IMPERIALISM BETWEEN THE WARS
We begin with a brief look at imperialism after World War I. In addition to the isolation of the
USSR and the defeat of workers’ revolutions elsewhere, the result of that war was the
suppression of the losing imperialists and their confinement within national boundaries. The
United States was the chief victor in that it became, for the first time, a net creditor on the world
financial market and an exporter of industrial goods; that is, it joined the first rank of the
imperialist powers. Yet this result was not enough to alleviate the epochal crisis that had brought
about the world war. None of the great powers was strong enough to dominate the world alone;
none had been eliminated as an imperialist contender (except Soviet Russia). The system
flourished for a short time on the spoils of war and the reconstruction from it, but then disaster
struck again.
Largely because of the Great Depression, the decade of the 1930's was characterized throughout
the imperialist world by increasing fusion between capital and its state. In addition to its
customary and growing functions of coercing the working class and supervising capitalist
competition, the state took on the role of central organ for the organization of the economy as a
whole. This was most extreme for the late-starting imperialists and those weakened by World
War I, who had the least opportunity for imperial expansion. The trend prominent in Nazi
Germany, militaristic Japan and fascist Italy was also expressed in the New Deal in the United
States.
The Great Depression could not be resolved by a new imperialist expansion, since the globe was
already imperialist property and could only be redivided. The resulting tensions led to intensified
rivalries, division of the world into currency blocs and a precipitous collapse of trade, factors
which led inevitably to the new world war. The national limits of capital concentration had been
reached and now had to be breached.
War was the only bourgeois solution to mass unemployment and poverty. In the depths of the
Depression in the United States, for example, at least a quarter of the work force was
unemployed and the rate of profit fell below zero. There were ups and downs within the decade,
but the normal processes of capitalist recovery never took hold; not even the governmentsponsored pump-priming of Roosevelt’s New Deal cured the crisis. Depression, usually
capitalism’s cure for its periodic crises at the proletariat’s expense, was no longer an effective
solution.
In Germany the crisis of the early 1930's was even greater and the bourgeoisie’s methods
correspondingly more drastic. Nazism was wielded against the workers to smash their powerful
independent organizations, drive down their standard of living, discipline them through a police
state — all to obtain a maximum extraction of surplus value. The crisis also led inexorably to
rearmament and a policy of military conquest of new territories to exploit.
STALINISM AND WORLD WAR II
But whatever the Nazis’ expansionist ambitions, the Second World War could not have occurred
without Stalinism’s victory in the USSR. War can break out under the pressure of economic and
political laws beyond the control of the ruling classes; but their wishes are nevertheless a factor,
and in the light of the revolutionary events that followed World War I, they feared to risk another
conflict that could provoke the workers to do away with capitalism once and for all. By 1939 the
rulers saw they had less to fear from the proletariat: the German workers had been crushed (with
the help of the Stalinists), the Comintern had proved its loyalty by restraining the Spanish
revolution and guaranteeing its defeat — and then the counterrevolution was completed in the
USSR itself.
The Hitler-Stalin pact under which the war began shocked Soviet supporters everywhere even
though it was predictable: the Soviet rulers had abandoned all methods of defense other than the
military and diplomatic. The pact was not a qualitative break; it signified only the momentary
failure of the alliances with the “democratic” imperialists that had been tried and would be
turned to again. It did not end class collaboration; it simply switched partners. In the West the
CPs changed from petty-bourgeois chauvinists to petty-bourgeois pacifists; in Germany, they
unsuccessfully approached the Nazis for a working relationship.
The pact was signed because the U.S., France and Britain still distrusted the land of the
Bolshevik revolution — even though they accepted the benefits of Stalinist policy in keeping
their own workers in line. They had reason: radical workers everywhere still looked to the USSR
as the embodiment of proletarian revolution. And although Western diplomats loudly objected to
Stalin’s bloc with Hitler, it proved something to them: that Moscow was now capable of any
iniquity — just like a normal nationalist power. In this ironic sense the pact laid the basis for the
later victorious alliance in World War II.
The Nazi-Soviet alliance was highly unstable. On the diplomatic level, its secret codicils bore
witness to Soviet imperialist aims in Eastern Europe and Western Asia, but they also showed that
Russian territorial interests were predominantly regional. Moreover, Soviet industrial growth
required importing Western technology and reducing the burden of armaments production; thus
Stalinism was conservative, looking to establish international stability.
Hitler, on the other hand, ruled a cooped-up imperialist powerhouse that had to pry open the
stranglehold on the world market held by the colonial powers (Britain, France, etc.) and the
United States. Nazi Germany was therefore a destabilizing and radical player on the world stage.
And even though Germany divided Poland with the USSR at the start of the war, its drive to
exploit East Europe and, inevitably, Russia precluded any long-term toleration of the deal with
Stalin.
Moreover, in countries where both Stalinist and fascist parties existed they could not seriously
collaborate over domestic policy. Nazism’s appeal to capital was based on its ability to crush
independent organizations of the working class, while the Stalinists outside of Russia were still
tied to layers and institutions of that class. For these reasons the alliance was necessarily shortlived.
The alternate alliance of the “democrats” with Stalin was therefore necessary, and during the war
it was established on the basis of Soviet nationalism as well as overall imperialist interests.
Stalin expressed his imperial desires to his Western allies as he had done to Hitler, and the USSR
was guaranteed its own sphere of interest alongside those of the Western powers. The Soviet
wartime resistance against the German offensive was conducted under the banner not of
socialism but of the Motherland, and the Comintern was officially disbanded in order to calm
remaining bourgeois fears of revolution. Even the “Internationale” was readily dispensed with
and replaced by a nationalist anthem.
The Communist Parties internationally defended the Soviet state and deepened their own
domestic nationalist orientation, especially in the Nazi-occupied countries after the invasion of
Russia. The CPs played leading roles in resistance movements, pressing the workers to
subordinate their independent and revolutionary interests to national bourgeois restoration. In the
West they became the most disciplined advocates of war production, using their influence to
quell even non-war-related strikes. The magnitude of the Stalinists’ counterrevolutionary role is
illuminated by comparing it to the expectations of a well known fellow-traveler at the time:
“There is strong evidence that the existence of the Soviet Union, and its consistently antiimperialist policy, exercised a strong disintegrating effect on the cohesiveness of the total
structure of imperialism ... it appears not unlikely that the disintegrating effects on imperialism
of a further growth of socialism will outweigh the consolidating effects [of the wartime alliance].
...
“We start with the assumption of a military defeat of German fascism. This happy event, it may
be postulated, would be followed by the collapse of capitalist rule and the victory of socialism
over substantially the entire European continent, not merely in Germany and the occupied
countries but also in France, Italy, and Spain. Anglo-American attempts at intervention are not
excluded, but it seems hardly likely that they would meet with success ... . Socialism would now
have an impregnable base extending from the Atlantic to the Pacific ... . A firm alliance with the
colonial and semi-colonial countries of Asia would follow ... . The evolution of the entire Far
East, including India, China and Japan, in a socialist direction would now be assured ... .”1
Such dreams in the spread of socialism under Stalinist guidance could only be held by people
with no conception of what transformations had been wreaked on the “land of socialism.”
Fascism was smashed by the Soviet armies, but the result was not even the victory of Stalinism
in Europe; imperialist deals led to the division of Europe and Asia, with the United States getting
the predominant share. Stalinism proved to be the key ingredient in imperialism’s survival, not
its demise.
The degree of corruption of the Stalinist parties in the working classes can be seen from the case
of the U.S. Communist Party. During the course of World War II, this party supported the
government’s imprisonment of thousands of Japanese-Americans solely on the grounds of race;
it enthusiastically endorsed the prosecution of Trotskyist leaders under the anti-communist Smith
Act (a law predictably turned against the CP itself after the war); it opposed the anti-racist
protests of the American black movement as a disruption of wartime unity; it fought against
workers’ strikes as sabotaging war production; and it approved the mass murder of civilians
through the atomic bombing of Japanese cities.
STALINISM AFTER THE WAR
Stalinism emerged strongly from the war. The basis for its resilience was the counterrevolution
in the USSR, which gave the bureaucracy class power and its own national capital, enabling it to
serve as a shareholder and bulwark of imperialism as a whole. The Communists had also gained
a dominating position within the world proletariat through the authority of the Bolshevik
revolution together with the Soviet victory over fascism. In Eastern Europe the CPs and the
Soviet Army suppressed workers’ uprisings to consolidate Stalinist control. In France and Italy
the CPs used their power and prestige to break the back of potential revolutions. In Vietnam,
North Africa and other colonies they paved the way for imperialism to regain its hold.
It is rarely remembered that the end of the war saw working-class upsurges throughout Europe.
Under conditions of misery and starvation in the war-ravaged territories, capitalism was
everywhere discredited. Workers rose up to oust the bourgeois officials from factories and local
administrations, and took steps to re-establish functioning economies; they had no need for
bosses and stood openly for socialism. To illustrate both the mood of the mass proletarian
movement and the CPs’ role, we cite a vivid historical account of events in German-occupied
1.
Paul Sweezy, The Theory of Capitalist Development (1942), pp. 358-9.
Italy in 1944-45 at the time of the Anglo-American invasion:
“To the Allied soldiers reaching the Rome region the experience was strange indeed. Armed
Italians, often in red shirts, waving revolutionary banners, greeted them, frequently after they
had set up their own local administrations. The Allied armies pushed some Partisans aside, and
even threatened them with the firing squad; they arrested many and threw them into prisons. ...
“Despite the Anglo-American policies and German repression, by the beginning of the spring of
1945 the Resistance numbered perhaps 150,000 men, supplying themselves with growing stocks
of deserted or captured fascist and German weapons. Success was imminent, and men joined. ...
“The workers of Milan, some 60,000 of them, revolted ... with slight bloodshed, assigning
control of the factories to workers’ councils and meting out justice to the fascists. Then in Turin,
against heavy German opposition, they swiftly took the city. Throughout northern Italy the
Resistance was in control everywhere, and quickly shot approximately 20,000 fascists or alleged
collaborators. The Resistance was triumphant and in power. Was Italy on the verge of
revolution?
“The Allied military wasted no time in finding out. They knew it was necessary to disarm the
Partisans and take over local governments. Disarmament, as the files of the military government
reveal, the Anglo-Americans executed ‘with astonishing success.’ ...
“With red banners and power in hand 150,000 men disappeared in a moment, and the almost
morbid fears of the English and Americans proved entirely chimerical. Why?
“... there is no question that the Communists saved the Old Order in Italy. As if by reluctant
necessity the Americans gradually acknowledged the conservative role of the CP when it was
useful to do so, and ignored it when it violated more convenient preconceptions. When
disarming the Resistance the Anglo-Americans made the decision ‘to secure the confidence of
the Partisan commanders and conduct disarmament through them. ...’ ... In both cases the leaders
were willing to cooperate, primarily because the majority were Communists.”2
In countries where the old bourgeoisie collapsed after the war, the CPs moved cautiously to take
power themselves. The new regimes as a rule were based on a Stalinist alliance with bourgeois
collaborators, based on the workers’ defeat. In the light of the belief in the revolutionary
possibilities of Stalinism held by so many present-day Trotskyists, we present the example of
Poland, since events in that country were well summarized by Ernest Mandel at the time:
“When the Red Army approached Poland, this country was caught up in the whirlwind of a
revolutionary upsurge. The workers occupied the factories, established workers’ control over
production, set up factory committees, etc. At that moment, it could be said: the proletarian
revolution in Poland had begun. But the political intervention of the Soviet bureaucracy was
primarily counter-revolutionary. The Soviet Army was used to ‘restore order,’ ‘re-establish the
2.
Gabriel Kolko, The Politics of War (1968), pp. 61, 436-8. This book and its sequel (Joyce and
Gabriel Kolko, The Limits of Power, 1972) contain a wealth of valuable information.
authority of employers’ and rapidly rebuild a bourgeois Polish state apparatus.”3
In other countries of East Europe circumstances differed but the overall results were similar.
Workers were still not prepared to go back to living under capitalism. So the Stalinists declared
that “democratic,” not socialist, revolutions were on the agenda and, after the workers’ upsurges
were crushed, used their control of armed forces to set up popular front governments with the old
bourgeois parties. Only several years later did the CPs oust their bourgeois partners, complete
the nationalization of industry and establish the Stalinized regimes that lasted until today.
An essential element of the Stalinist counterrevolution was the elimination of the revolutionary
proletarian leadership. Mainly Trotskyist, they were consciously murdered before the war in
Spain and Russia and afterwards wherever the Stalinists held power. The slaughter of the Soviet
Trotskyists in particular meant eliminating the most advanced and experienced layer of
revolutionary leaders in the world. Elsewhere Trotskyists were influential in only a few
countries, where they sought to lead the colonial workers and peasants against both imperialist
war blocs. In Vietnam, the Stalinists, with guns supplied by Chiang Kaishek’s China and the
West, wiped them out at the end of the war and handed the country back to French imperialism.
Despite political mistakes made by the Trotskyists during the war, they played an often heroic
role. They fought both for socialism and against national chauvinism; they were practically alone
in combatting anti-German racism in the West (above all in sections of the anti-fascist resistance
movements influenced by the CPs); at enormous risk they published a German-language paper
distributed to soldiers of the Nazi army in occupied France. The beheading of the working class
on top of all other counterrevolutionary events not only prevented revolution after the war but
derailed the workers’ movement for a long time to come.
FROM ALLIANCE TO COLD WAR
The Stalinists’ eagerness to act as full members of the imperial club was summed up in one of
history’s classic imperialist deals. Here is Winston Churchill’s own description of negotiations
for the Yalta treaty that shaped the postwar world:
“The moment was apt for business, so I said, ‘Let us settle about our affairs in the Balkans. Your
armies are in Romania and Bulgaria. We have interests, missions and agents there. Don’t let us
get at cross-purposes in small ways. So far as Britain and Russia are concerned, how would it do
for you to have 90 percent predominance in Romania, for us to have 90 percent of the say in
Greece, and go 50-50 about Yugoslavia?’ While this was being translated I wrote out on a halfsheet of paper:
Romania
Russia . . . . . . . . 90%
The others . . . . 10%
Greece
3.
Mandel, Fourth International, November 1946.
Great Britain . . 90%
(in accord with the U.S.A.)
Russia . . . . . . . . 10%
Yugoslavia . . . . . . . . . . . . . . . . . . . . . . . . . 50-50%
Hungary . . . . . . . . . . . . . . . . . . . . . . . . . . . 50-50%
Bulgaria
Russia . . . . . . . . 75%
The others . . . . 25%
“I pushed this across to Stalin, who had by then heard the translation. There was a slight pause.
Then he took his blue pencil and made a large tick upon it, and passed it back to us. It was all
settled in no more time than it takes to set down. ...
“After this there was a long silence. The penciled paper lay in the center of the table. At length I
said, ‘Might it not be thought rather cynical if it seemed we had disposed of these issues, so
fateful to millions of people, in such an offhand manner? Let us burn the paper.’ ‘No, you keep
it,’ said Stalin.”4
And dispose they did. The outstanding example of East-West collaboration along the lines
Churchill indicated occurred in Greece, which had been consigned to the Western sphere of
influence. Stalin was holding back the Greek guerrillas and had already cut off aid to them by
closing the borders of his Balkan satellites. (The dissident Stalinist Tito did his bit for
imperialism by sealing the Yugoslav border to the rebels in 1949.) In the course of the BritishAmerican “pacification” of Greece, thousands of victims were executed and 14,000 were
deported without trial to island concentration camps to overcome “Communist indoctrination.”
But that was not all. In France, for example, the CP joined DeGaulle’s postwar government, in
which it voted to send troops to reconquer Vietnam and helped crush uprisings in North Africa
and Madagascar.
The shared domination suggested by Churchill’s memoir was not held to for very long by either
side, given the moves made by the West in the latter part of the war to hem the Soviets in.
Stalin’s fears of “democratic” imperialist presence on his doorstep made him more wary but did
not affect his attempt at building a grand alliance.
American military aid to the anti-communist forces (including fascist collaborators) was sent
under the Truman Doctrine that brought the wartime alliance to an end. Then U.S.
Undersecretary of State, Dean Acheson, described how he convinced Congress of the need for
such a measure:
4.
Churchill, Triumph and Tragedy (1953); cited in “Behind Yalta: The Truth About the War,” in Hal
Draper, ed., Independent Socialism and War (1966), p. 44.
“In the past eighteen months, I said, Soviet pressure on the Straits, on Iran, and on northern
Greece had brought the Balkans to the point where a highly possible Soviet breakthrough might
open three continents to Soviet penetration. Like apples in a barrel infected by one rotten one,
the corruption of Greece would infect Iran and all to the east. It would also carry infection to
Africa through Asia Minor and Egypt, and to Europe through Italy and France, already
threatened by the strongest domestic Communist parties in Western Europe.”5
Acheson refrained from pointing out that the Western CPs were openly dedicated to the
reconstruction of capitalism, not socialist revolution. The kernel of truth in the notion of
Communist bogeymen was the desire of masses on every continent for freedom from foreign
domination and for a better life, summed up as socialism. That is the infection that had to be
quarantined in the interests of imperialism and U.S. domination, not any desire on the part either
of Stalin or the allegedly indoctrinated masses for the spread of Soviet territorial power beyond
the USSR’s East European satellites and Asian perimeter.
By the late 1940's, the Stalinists had done the job of crushing the revolutionary potential of the
workers’ movements effectively enough so that the West no longer needed them. But to retain its
grip Stalinism had to display a level of militancy, so it still appeared dangerous in a volatile
world. The Maoist victory in China, which Stalin had not wanted, could not be recognized as
part of a worldwide anti-colonial movement and so had to be painted as a conspiracy directed
from Moscow.
Under these conditions the U.S. was able to depict the “Communist threat” as an alien force in
order to cement the new alliance. There was still widespread radical militancy in the working
classes, so trade unions were purged of radicals and rival labor bodies were created. The CPs
were ostracized and driven from governments in Western Europe, McCarthyism in the U.S.
served to roll back the liberal and leftist trends prominent since the Depression, and the Soviets
were excluded from the imperial alliance by means of the Cold War.
A new balance of power was struck between what appeared to be two distinct and hostile worlds.
Even though excluded from partnership, the Soviets continued to prop up the overall imperialist
system. While Europe and Japan held their rivalries with the U.S. and each other in check, the
USSR used its still-potent influence to keep third-world revolutions within bounds. The new
nations of the third world which had won independence after the war became formally neutralist
and often “socialist.” The initial nationalist victories, India’s above all, seemed to point to a way
out of the imperial grip and inspired anti-imperialist movements everywhere. But while
remaining politically friendly to the Soviets, the ex-colonies were effectively reintegrated into
the Western-run imperialist world market. The whole balance, including Russia’s alleged role as
external threat, was aimed at preserving stability — above all preventing upheavals by the
growing working classes.
Throughout the postwar period, the Soviet Union has tried to play an influential political role
that would enhance its economic opportunities. This does not mean necessarily intensifying its
rivalry with Western imperialism but rather doing whatever is required to increase overall
5.
Acheson, Present at the Creation (1969), cited in Noam Chomsky, Towards a New Cold War (1982).
stability. It is impossible to understand the Soviets’ policies by assuming either that they
fundamentally defend progressive interests, or that they are the most dangerous evil on the planet
— the most common “Marxist-Leninist” positions. The only realistic analysis is that they are
defenders of the national capital everywhere, conditioned by the particular mode of operation
developed in Soviet Russia.
THE STALINIST PARTIES
No one who had followed Trotsky’s analyses of the Comintern’s degeneration could be surprised
at the Stalinists’ will to carry out such betrayals. What was unexpected was their capacity to do
so. Trotsky saw the Stalinist parties traveling the same road as the chauvinist social democrats;
only transitory bureaucratic rivalries inhibited their incorporation into traditional reformism.
Here is his assessment of these “ex”-Communists, once he had determined that Stalinism was a
counterrevolutionary force:
“As regards the ex-Comintern, its social basis, properly speaking, is of a twofold nature. On the
one hand, it lives on the subsidies of the Kremlin, submits to the latter’s commands, and, in this
respect, every ex-Communist bureaucrat is the younger brother and subordinate of the Soviet
bureaucrat. On the other hand, the various machines of the ex-Comintern feed from the same
sources as the Social Democracy, that is, the superprofits of imperialism. The growth of the
Communist parties in recent years, their infiltration into the ranks of the petty bourgeoisie, their
installation in the state machinery, the trade unions, parliaments, municipalities, etc., have
strengthened in the extreme their dependence on national imperialism at the expense of their
traditional dependence on the Kremlin.”6
This analysis was true but incomplete. During the war the CPs did not disintegrate or dissolve
into the social democracy, despite the dissolution of the Comintern. They were indeed reformist:
unlike centrists, they didn’t vacillate in the least in support of capitalism. But theirs was a
reformism of a qualitatively different kind from that of the pluralist social democrats. The CPs’
essential nature was to be champions of the national capital and advocates of the statification of
capital to the highest possible degree. Their goal was “socialism” as they understood it: a society
based on the Soviet model, with industry controlled by the state and the working class out of
power. But they championed the “national interest” everywhere.
In countries where the old bourgeoisie was too weak to rule, the CPs took over and carried out
bureaucratic nationalizations, But they sought at first to lead a coalition of shadow bourgeois
parties in office to legitimize their own participation in the defense of the national capital. (We
will discuss the Stalinist takeovers through our analysis of Trotskyism in Chapter 7.)
Where the bourgeoisie remained strong, as in the imperialist Western powers, the CPs
consistently stood for an increased role for the state nevertheless. They pursued reformist
policies since the mid-1930's through bourgeois popular-front alliances, because every measure
taken to strengthen the economic role of even a bourgeois state is regarded as a step towards
“socialism.” As Trotsky observed, in the bourgeois democracies the CPs flourished on posts
6.
Trotsky, “A Fresh Lesson,” Writings 1938-39, pp. 70-71.
funded by the state and rested on sections of the labor aristocracy and the middle class. After the
war the state expanded everywhere, because of the laws of capital accumulation in general and
the need to both incorporate and suppress the working class in particular. The CPs expanded as
the vanguard of the overall trends toward statification and nationalism.
The inspiration and direct role of Stalinism was particularly important in third-world countries.
The Russian revolution had originally aroused not only workers and intellectuals dedicated to the
communist cause but also members of the intelligentsia attracted by the dream of an independent
nation-state that could stand up to imperialism and overcome centuries of humiliation. The
Stalinists found a social base among government employees, a sector that expanded greatly both
in the imperial past and the nationalist present. More generally, since wartime imperialism
depended on winning mass support, it had to encourage nationalist sentiments not only at home
but also in the colonies; here mobilizing the masses under the slogan of “democracy” required
using the rhetoric of national self-determination in to counter pro-Axis propaganda. This
enhanced the appeal of the CPs and other petty-bourgeois nationalist currents.
PERMANENT REVOLUTION EXTENDED
The bourgeois nationalists of the oppressed countries looked to the Soviet Union for support
against imperialism and as a model for their own countries. A new nation state in this epoch
emerges into a world of immense repressive force and economic interdependence. To fend off
the imperialists it must be capable of highly concentrated control of both capital and political
power. The nation needs to mobilize and retain the bulk of its own internally produced surplus
value, so that the fruits of exploitation can be put to use at home rather than abroad. It also has to
repress internal capitalists with interests tied to imperialism more directly — as well as to keep
down the producing classes, whose aspirations for a better life are whetted by the anti-imperialist
struggle. These conditions require a centralized state apparatus, and the Soviet model provided
it.
Political independence for the new states and at least a temporary measure of economic leverage
was the price imperialism had to pay to re-establish international stability under U.S. hegemony.
Facing a tide of mass rebellions, the wiser imperialists chose to accommodate to it, thereby
maintaining economic influence of not political control. In most of the former colonial countries,
separation from imperialism was won by non-Stalinist petty-bourgeois forces who neither could
decapitate their proletariats as effectively as the Stalinists nor wished to centralize property to
the same extent. But they too took power only because of the defeat of the world proletariat. The
victory of Stalinism is the key that locked the revolution of the oppressed colonial masses into
the nationalist prison and kept them under imperial domination.
Whether Stalinist or not, the new nationalist rulers saw their goal as defending and expanding the
nation-state and the national capital. To this end some chose to welcome imperialist investment;
others preferred to build up local industries with state aid to produce needed goods at home
rather than import them. Almost all used some form of socialist or populist rhetoric to justify
strengthening the state and capital. As noted in Chapter 2, imperialism creates a reciprocal
nationalism in the imperialized countries. And this nationalism, like the imperialism that
engenders it, is heavily reliant on the national state.
In this light, the theory of permanent revolution has to be extended. A central point of Trotsky’s
theory was that the bourgeoisie feared to challenge any form of property, given the potential
threat of the proletariat. Therefore throughout this century it has been unable to carry out the
democratic and national tasks of the bourgeois revolution; the internationalist workers’
revolution is objectively necessary. But under specific conditions — where the proletariat has
been defeated or decapitated and its threat to property thereby temporarily removed, and where
the traditional bourgeoisie is too feeble to pose even a temporary break from imperialism —
elements from the bureaucratic middle classes can seize the reins of power. Such nationalists can
even resort to the dangerous step of statifying property, if the workers have been effectively
excluded from independent activity.
This corollary to permanent revolution is critical for understanding postwar international
politics. The workers’ defeat accounts for the creation of so many Stalinist states in the war’s
aftermath, as well as for the particular sequence of events in which the proletariat was shoved
aside before property could be nationalized. The theory also illuminates the initial success and
later collapse of third-world nationalism, the subsequent dependence of these countries on
assistance from the Western capitalist powers. All forms of private property were becoming
interpenetrated in Russia when Trotsky first developed the theory, and it is all the more true
today — when there is not only interpenetrated ownership but an inescapably international
economy.
Trotsky wrote a brilliantly perceptive critique of Stalin’s policy of “national socialism” which
applies with equal force to the postwar third-world countries:
“Marxism proceeds from world economy, not as a sum of national parts but as a mighty,
independent reality, which is created by the international division of labor and the world market,
and, in the present epoch, predominates over the national markets. The productive forces of
capitalist society have long ago grown beyond the national frontier. The imperialist war was an
expression of this fact. In the productive-technical respect, socialist society must represent a
higher stage compared to capitalism. To aim at the construction of a nationally isolated socialist
society means, in spite of all temporary successes, to pull the productive forces backward even
as compared to capitalism. To attempt, regardless of the geographic, cultural and historical
conditions of the country’s development, which constitutes a part of the world whole, to realize a
fenced-in proportionality of all the branches of economy within national limits, means to pursue
a reactionary utopia.”7
Indeed, national economic independence for the ex-colonial countries could only be temporary
during the period of relative prosperity after the war based on the working-class defeat. This was
the time when the bureaucratic middle strata grew rapidly in all countries, economically
advanced and semi-colonial. The illusions of viable third systems and in third-world nationalism
reflected the self-inflation of these layers. Their statist national capital solutions, reflecting the
Stalinist model, were posed as an alternative to the real choices in society: the bourgeoisie and
capitalism on the one hand, and the proletariat and socialism on the other. The new nationalist
rulers eventually had to break from the fantasy that they were not tied to international
7.
Trotsky, “Preface” to the American edition of Permanent Revolution (1930).
capitalism.8
The removal of the working class from the political stage, however, could be only temporary.
The proletarian struggle cannot be eliminated by capital, however repressive its state; the
defeated workers eventually recover, and the laws of motion of the system continually drive
them to oppose their bosses. That is the reality that has deceived all observers of the “end of the
working class” school, even those on the left. It means in addition (as we will show later) that
permanent revolution applies in the Stalinist bloc as well as in the countries of traditional
capitalism.
2. POSTWAR IMPERIALISM
Despite the great proletarian defeats and the unprecedented economic boom in the dominant
countries of Western capitalism, the end of World War II was not the start of a new or higher
epoch of capitalism. The proof that the epoch of decay persists is the world economy of the
1970's and 1980's, when the partially suppressed crisis cycle reappeared and bourgeois theorists
again panicked aloud over the threat of a new great depression. The immense international debts
owed by third-world, East European and even some leading imperialist countries confirm the
fictitious nature of much of the postwar profitability. Lenin’s theory of imperialism as the final
epoch of capitalism remains central for understanding the system’s operation in our own day.
THE UNEXPECTED BOOM
The Cold War balance of power would not have been possible without the postwar boom that
brought considerable prosperity to the imperialist countries and opportunities for development
even to some of the former colonized and semi-colonized nations.
The boom was based in the United States and on its victory in the war. In contrast to all the
economic efforts of the U.S. government in the 1930's that failed to get the economy back on its
feet, the war itself was the only “public works” project that the bourgeoisie would endorse and
was also large enough to end mass unemployment and restore profits. The astronomical state
budget was financed through debt, as were those of its enemies and allies. At first, with about
one-fifth of the labor force unemployed and one-quarter of industrial capacity unused, war
production created a boom without cutting back civilian production. In the words of the famous
pro-New Deal economist John Kenneth Galbraith, “The Great Depression of the thirties never
came to an end. It merely disappeared in the great mobilization of the forties.”9
The American victory in the war was also an economic victory. It made good the U.S. debt, but
the other powers, even those on the winning side, were weakened economically and ended up
greatly indebted to America. Japan and Germany were subjected to U.S. domination for years,
and Britain and France saw their empires dissolved and their ex-colonies pried open to American
8.
9.
The ideas of this section were first worked out and are more fully elaborated in “What Are the
Communist Parties?”, Socialist Voice No. 3 (1977), and “Permanent Revolution after World War
II,” in the LRP pamphlet Permanent Revolution and Postwar Stalinism (1987).
John K. Galbraith, American Capitalism (1952), p. 78.
penetration — most significantly, the oil producers of the Middle East. Rescued from economic
collapse (and its political consequences) by U.S. loans, Europe and Japan were likewise
subordinated to the American-dominated international order.
The Marshall Plan, which was instrumental in spreading the boom to the European capitalist
powers, was not the rescue plan for downtrodden Europeans as it was advertised. The “rescue”
came three years after wartime devastation had left people under miserably oppressive
conditions. Indeed, it was only after the proletarian movements had been decisively set back
under their Stalinist and social-democratic leaders that the U.S. then stepped in to bolster the
European economies.
The boom had been anticipated by neither Marxists nor bourgeois analysts. Joseph Schumpeter
wrote: “Everybody is afraid of a postwar slump, threatening from a drastic reduction of military
expenditure financed by inflationary methods as well as from mere reorientation of production.
The all but general opinion seems to be that capitalist methods will be unequal to the task of
reconstruction.”10 Trotskyist theorists reasoned similarly, as we will see in the next chapter.
What all overlooked was the opportunity to extract surplus value from advanced working classes
which had been subjected to major defeats. As a leading business magazine wrote of the French
worker after the war: “His standard of living today is marginal in the statistics and all but
insupportable in the reality.”11
Also important was the international industrial dominance by U.S. industry, which produced
two-thirds of world output. This was the ingredient missing from the economic scene after the
First World War. Now American military and economic hegemony permitted a greater
concentration of resources than ever before in capitalism’s history; control over surplus value
was centralized on an international scale. The combination of high rates of exploitation and an
unparalleled level of international centralization of capital gave birth to the boom.
The techniques of government intervention learned in the 1930's were continued after the war in
all the advanced countries. They included subsidies to industry through the arms budget and
other state spending, together with unemployment insurance and other mechanisms to prevent
working-class incomes from sinking as low as before the war. These Keynesian methods
succeeded in dampening the swings of the business cycle and sustain the prosperity bubble once
it got started; they could not create the masses of surplus value that powered the boom. That was
the achievement of imperialist hegemony and the proletariat’s defeat.
A factor already mentioned was also important: the isolation of radicalism within the workers’
movements through the Cold War. One consequence was that industrial speedup and increased
productivity were won by the capitalists — in return for wage increases that would ultimately be
eaten away through inflation (another deliberate Keynesian policy).12 These wage gains had
10. Schumpeter, “Capitalism in the Postwar World,”in S. Harris, ed., Postwar
Economic Problems (1943), p. 120.
11. Fortune, December 1948.
12. Keynes himself justified inflation with delicacy: “Whilst workers will usually resist a reduction
of money-wages, it is not their practice to withdraw their labor whenever there is a rise in the
price of wage-goods.” (The General Theory of Employment, Interest and Money, 1935; p. 9.)
nevertheless to be fought for through militant struggles, which the accommodationist union
bureaucracy successfully kept divorced from political aims threatening to capital. Depoliticized
or narrowly focused struggles replaced the more radical battles workers were bursting to engage
in by the end of the war. A reactionary labor aristocracy was strengthened in the advanced
industrial countries. Thus for two decades after the world war, wages of the majority of workers
in the imperialist countries advanced with unexpected regularity; but capital succeeded in
preventing a return of the proletarian consciousness that had been crushed in the 1930's.
The availability of surplus value in the West contributed to a buildup of the white-collar middle
classes, a vast layer of unproductive labor and a modern-day adjunct of the labor aristocracy. As
already noted, World War II and the need to contain the proletariat led to a big expansion of the
state apparatus in the imperialist heartlands; in particular, military and corporate bureaucracies
grew inordinately, along with the concentration of power at the level of the state characteristic of
the epoch.
Paradoxically, the boom based so heavily on the workers’ defeat ended up creating the illusion
of permanent working-class prosperity and rising living standards. In the United States
especially, the early 1960's were heady days. The future appeared luminous for almost everyone
entering adulthood; at one point in the decade college attendance exceeded 50 percent of all high
school graduates, indicating that masses of working-class youth thought they had a good chance
to rise in society. The black revolts of the period, initiated by college students, reflected the bitter
realization that with so much prosperity at hand black people were still subject to intolerable
conditions.
The optimism characteristic of the postwar boom period was felt in Soviet Russia too.
Khrushchev predicted the surpassing of American production levels; he also boasted at the 22nd
Party Congress in 1961 that “socialism had triumphed fully and finally in our country and we
have entered the period of the full-scale building of communism.” Moreover, “everyone will be
assured of material sufficiency; by the end of the second decade [1980] there will be assured an
abundance of material and cultural benefits for the entire population.” Contrast this with
Gorbachev’s sober assessments today.
FICTITIOUS CAPITAL
The boom engendered the buildup of a massive balloon of fictitious capital. The standard source
of fictitious capital, the overvaluation of investments (Chapter 1), was inflated by expanding
waste production and speculation. In the classical business cycles such balloons were
periodically burst by the periodic crises; in contrast, the postwar balloon has been continually
inflated. The danger of a cataclysmic collapse as a result of each upcoming cyclical crisis
compels governments to try to postpone such crises by puffing up the debt balloon — thereby
making the potential consequences of an explosion even greater. In this sense the fictitious
capital boom is a reflection of the latent power of the working class and its permanent threat to
capital.
State spending on arms, social benefits won by workers and subsidies of inefficient capitals
created large public debts from World War II on, and the consequent tax drain on profits meant
that a growing portion of business investment had to come from borrowed funds as well. Beyond
a certain point debts are not simply one firm’s expense balancing another’s income; they are
claims on surplus value that require repeated postponement to the future. The accelerating debt
buildup reached the point where by 1981, more capitalist income in the U.S. came from interest
than from corporate profits — the first time this had happened since the years of subzero profits
in the 1930's.13
Capitalism’s creation of fictitious value threatening to choke the system is an illuminating
reflection of the inherent contradiction between the drive to accumulate and the need to preserve
the value of existing capital. The absolute dedication of capital to the maximization of value
leads it to generate value forms without the backing of material goods; then the dedication of
much surplus value to the proliferation of paper value disrupts the growth of real production. An
economic journalist reported the views of a prominent bourgeois theorist:
“Peter F. Drucker ... contends that there has been a basic change in the world economy. The
‘real’ economy of goods and services and the ‘symbolic’ economy of money, credit and capital
are no longer bound tightly to each other, he says, and ‘are moving further and further apart.’
Striking evidence to support this thesis is provided by the widening disparity between the
sluggish growth of the real economies of the United States and other industrial countries and the
exuberance of their financial markets. Yesterday the Dow Jones industrial average [for the New
York stock market] closed above 2000 for the first time, a gain of 31 percent in the past year. But
this nation’s economy grew only 2.6 percent last year ... . Likewise, ... the Morgan Stanley
Capital International Perspective World Index, a measure of global stock market performance,
rose 39 percent, adjusted for the dollar’s decline. But the real world economy was in the
doldrums.”14
Bourgeois analysts fear, of course, that the balloon can be punctured and billions of dollars of
fictitious capital, together with its owners, wiped out. After all, when crises destroy values, the
fictitious values are the first to go. A foretaste of what is in store was provided by the October
1987 stock market crash, which deflated the balloon but by no means enough to prevent a later
explosion.15 Contrary to Cliff and other theorists who see use values replacing value as the goal
of capitalist production (Chapter 1), the opposite is in fact taking place: as balloons of fictitious
value build up, use is more and more separated from value. In the decadent epoch of capitalism,
fictitious capital becomes a brake on the system that can be overcome, revolution aside, only by
volcanic purges in the form of great depressions and world wars.
The situation is analogous to the condition of “permanent crisis” in the Soviet variant of
capitalism. Just as the Stalinist rulers cannot allow enterprises to go out of business without
endangering their system, so too Western capitalism cannot afford to allow major corporations or
banks to collapse. Because all the giant firms are interpenetrated, the collapse of one would bring
down many others. For this reason the Chrysler Corporation was bailed out by the U.S. Congress
in the late 1970's. Even under the “free-market” Reagan Administration, the government has
13. Economic Report of the President, U.S. Government, 1982.
14. Leonard Silk, New York Times, January 9, 1987.
15. See “After the Crash,” Proletarian Revolution No. 31.
intervened to prop up failing firms and banks if they are big enough. When the Continental
Illinois bank, one of the country’s largest, collapsed, it was taken over and for practical purposes
nationalized. Similar solutions have been used in Western Europe and Canada.
The build-up of fictitious capital means that a large quantity of paper capital is chasing after a
comparatively small pool of surplus value. This means a falling rate of profit, a reflection of the
law Marx analyzed and which applies especially in the epoch of decay. Empirical evidence on
the FRP for the postwar period shows that, for U.S. capital, the overall rate of profit held even at
an average of 10 percent (with rises and falls of about 2 percent) in the 1947-67 period, but then
fell sharply to an average below 6 percent from then through 1985.16
The excess claims on surplus value that arise from the fictitious capital boom contribute to
another Western analogue to Stalinism: shoddy maintenance of the “infrastructure” of industry,
transport and the natural environment. When massive debts have to be paid, firms and
governments have to throw all available cash into the pot — not only their profits but also their
constant capital renewal and repair funds. (A portion of constant capital can easily be credited as
surplus value, thereby exaggerating the real rate of profit.) The world has faced industrial
disasters not only at Chernobyl but also at Three Mile Island, Windscale and Bhopal; not only is
Lake Baikal polluted and the Aral Sea evaporating, but Lake Erie is dying and the Rhine River a
chemical sewer. Both forms of capitalism find that maximizing the national capital means
preserving obsolescence and permitting environmental decay regardless of human cost; neither
form has resources sufficient to solve the crises brought about by the system’s mad disregard for
the future.
As under Stalinism, postponing a decisive crisis (and the restructuring of capital that would
accompany it) has meant that the underlying basis for profits is weakened and that the collapse,
when it does arrive, will be all the worse. The postwar period has exhibited so far no all-out
collapse but rather a series of mini-crises that succeed in destroying only smaller capitals and
strengthening the hand of the dominant monopolies. But the untouchability of the giants is not a
permanent condition.
THE END OF THE BOOM
The conditions that created the boom eventually turned. The Cold War and the international
instability it engendered had led to a tremendous arms buildup. The vast military budgets of both
imperialist and non-imperialist countries formed the major part of state spending globally, a
considerable drain on productive investment and therefore on economic renewal and expansion.
This and other Keynesian techniques for dampening the business cycle left crises unresolved: old
capital was not sufficiently devalued and backward industries continued to operate. Recessions
became less profound but more frequent; the postwar cycles averaged less than five years rather
than the nearly ten of classical times.
Two decades without a major downturn led to overproduction on a world scale, especially when
16. Anwar Shaikh, “The Falling Rate of Profit and the Economic Crisis in the U.S.,” in URPE, The
Imperiled Economy (1987).
Japan and West Europe recovered from wartime destruction and reached first rank in
manufacturing. The combination of overproduction and fictitious capital left fewer outlets for
productive investment; from this followed the plague of speculative corporate takeovers and a
new expansion of fictitious claims to value. By the early 1970's a serious crisis cycle had reemerged, and unemployment levels moved out of the realm of “prosperity.” The U.S. and Britain
became conspicuous examples of gross extremes of wealth and poverty existing side by side.
Declining imperial fortunes were accelerated by the tremendous costs of the Vietnam war, the
West’s primary attempt to stifle nationalist struggles against imperialism. The U.S. defeat was a
blow to imperialist prestige and a signal that its unchallenged hegemony was at an end. It is no
accident that the end of the postwar boom led to rising working-class struggles East and West. In
the 1960's workers in the U.S. demanded their share of the diminishing prosperity through
widespread wildcat strikes and the black ghetto uprisings; workers in France (1968) and Italy
(1969) broke their chains through massive strike struggles. So did workers in Czechoslovakia
and Poland, countries whose economic fortunes had risen and fallen in parallel with the West.
The upshot is that world capitalism is now experiencing an intensifying crisis: not just periodic
downturns but, underneath the ruling-class glitter, the resumption of depression conditions for
many. In the United States, still the locomotive of the world economy, the working-class
standard of living has not increased since the late 1960's. One revealing comparison is that
average income for working-class men aged 40 in 1973 declined over the next decade by about
1.5 percent per year; in the 1950's and 1960's it had grown by about 2.5 percent yearly. The
decline is greatest among industrial workers whose high pay has been replaced by the miserable
wages available in unskilled blue-collar service jobs, and especially among black and Latino
workers.17
The fact that the expansion of the postwar years had ended was hidden by rising paper profits
and stock-market values. But other omens of a long-term depression are strong. In 1987 in the
United States, with over 7 million workers unemployed by government figures, another 6 million
“discouraged” and not officially in the category of those seeking jobs, plus an immense 18
million working less than half time for an annual income of under $10,000, the effective
unemployment rate was well above 25 percent — a level comparable to the 1930's. This situation
has not yet penetrated the consciousness of most American workers. One commentator summed
up the problem for the ruling class:
“Sooner or later, a falling living standard will be political dynamite, too. When it dawns on
enough Americans that they can no longer expect to do better economically than their parents, or
even as well, their reaction is likely to be outraged, even dangerous.”18
That is correct. The bourgeoisie understands that the working class is more powerful than it
appears under its reformist leadership. The unpopular Vietnam war, for example, was fought
under the “guns and butter” recipe — wages were kept relatively high to prevent a social
17. Frank Levy, “Changes in the Distribution of American Family Incomes, 1947 to 1984,” Science,
May 22, 1987.
18. Tom Wicker, New York Times, August 17, 1987.
explosion. A decade and a half later, when declining profits led to a united capitalist attack on
workers’ wages, President Reagan took the lead by crushing the air traffic controllers’ union
(PATCO). But the bourgeoisie did not dare follow up with an all-out war on the unions. And in
the face of today’s desperate need for higher productivity and profits, when bosses are turning to
incorporative devices like “quality-of-life circles” to grind workers down, austerity is real but its
pace remains slow. The bourgeoisie recoils from a head-on conflict.
Internationally, U.S. economic hegemony could not last forever. Industry in Japan and
continental West Europe expanded and modernized more rapidly, unencumbered by the arms
burden. The resulting competition (including that from industries, many imperialist-owned, in
the “developing” countries) has led to American obsolescence in specific industries like steel,
textiles and shipbuilding. But when the U.S. economy weakens, its centrality and size means that
world capitalism as a whole suffers. Another factor is the enormous third-world debt: its
consequences have inflicted misery on millions; default would threaten ruin for major U.S.
banks.
The economic situation that capital has faced since the early 1970's is tenuous. Profits are
insufficient for the thoroughgoing restructuring of capital necessary for a new boom. The U.S.
even hesitates to commit itself to the new opportunities (in 1990) for major investment in East
Europe. There is also fear of a deep depression that could wipe out the most backward and
obsolete firms and devastate the working classes once again.
The “Reagan revolution” in economic policy increased U.S. government debt by years of
borrowing in lieu of taxation and amassed a record foreign debt through enormous trade deficits.
The gain was a spurt of prosperity for the middle classes at the cost of massive decay of the
country’s productive industrial plant, not to mention the infrastructure of transport and the
environment already cited. Reagan’s “voodoo economics” (George Bush’s jibe in the 1980
presidential campaign) seems, oddly enough, to have mimicked the Gierek strategy of
postponing Poland’s crisis in the 1970's. In any case, the result will be much the same: the crisis
will come to a head through a financial collapse and the working class will be told to shoulder
the burden for excesses it never shared. The U.S. has the potential for the greatest working-class
eruption in its history. The Eastern European crisis (Chapter 8) reflects the future not only for the
Soviet rulers but for America as well.
LENIN’S THEORY REVISITED
The end of the postwar boom plus the revival of working-class struggle laid the basis for a
renewal of left-wing movements and Marxism. There was also a return to Lenin’s analysis of
imperialism — and a corresponding attack by liberal and social-democratic theorists against the
relevance of Leninist theory.
Some obvious updating has to be done to Lenin’s “five point” definition of imperialist
economics (Chapter 2). Monopoly, the merger of bank and industrial capitals, and international
cartelization are still prominent — more so, with the rise of “multinational” corporations, the
increased statification of capital (up to and including the Stalinist form), and even state cartels
along the lines of “common markets.” On the other hand, the outright colonialism of the early
20th century is comparatively limited today. A handful of powers still exploit the world, not
primarily through direct political rule but rather through economic power — backed up, as
always, by overwhelming military force.
But this was not the main line of attack. The American social democrat Michael Harrington
argued that central features of imperialism were no longer decisive for world politics:
“Lenin’s theory of the essential and inevitable role of imperialism in Asia, Africa and Latin
America no longer holds. The Third World is less important to the advanced capitalist powers
than at any time in their history; and their prosperity is much more dependent on the
maintenance of high mass consumption within their own borders — and within other wealthy
countries — than upon the exploitation of the world’s hungry.”19
Harrington concluded that imperialist war was now a matter of policy, not compulsion: the
system, he said, “is no longer fated to do evil.” This could only have been written during the
boom, when illusions in the eternal prosperity of the West extended to the conclusion that
imperialism would be happy to live in peace with its victims. Theories like Harrington’s were
devised less to probe the reality of the modern world than to defend the reformist thesis that
continuing imperialist outrages (notably the U.S. war on Vietnam) were unfortunate choices to
be corrected by electing greater numbers of liberal bourgeois politicians.
Since Harrington wrote his rationalization, the experience of Thatcherism in Britain and
Reaganism in the U.S. has again falsified the underconsumptionist view that capital becomes
unprofitable if mass living standards decline. Profit, after all, not consumption, is what keeps the
system going. As for the economic significance of the third world, “deindustrialization” has
shifted many jobs there in search of lower wages. The capitalists are constantly proving that they
depend on exploiting the workers, both abroad and at home, far more than on satisfying
consumption needs.
Harrington was also wrong to suggest that Lenin’s theory of imperialism applied exclusively to
exploitation of third-world peoples: Lenin specified capital export in general, to advanced
countries as well. But much of this is linked to exploitation of the third world; U.S. oil
companies’ investment in the Europe in the postwar period, for example, enabled them to
increase their profits from the Middle East and Algeria. Moreover, even if Harrington were right
to imply that direct investment in third-world industry is relatively declining, there remains the
indirect method of loans to third-world capitalists and governments — which have increased
enormously in the past fifteen years. Finally, the fact that the capitalist powers are vitally
interested in preserving their domination of the third world is proved by their constant wars to
guard the system’s outposts and halt militant nationalist movements. They are imperialist as
ever.
The social-democratic theories depend in part on the fact that several “developing countries” (a
euphemism for the victims of imperialism) have in fact developed. In the 1970's bourgeois
apologists were hailing Brazil, Mexico, Taiwan, South Korea, and other countries whose
19. Harrington, Socialism (1970), p. 389.
economies expanded rapidly. They grew not only because of the investments of imperialist
capital, but also through the prospering of local bourgeoisies from the combination of slave
wages (typically enforced by military repression) and the growth of world markets during the
boom.
This is no refutation of Lenin. A key element in Lenin’s theory is commonly overlooked: since
capitalist decay would mean parasitism of the richest countries through the siphoning of profits
from the poor ones, Lenin foresaw economic expansion in the colonies accompanied by decline
in the imperialist center.20 During the postwar boom, Lenin’s prediction seemed wrong: the
imperialist powers expanded and did “raise the standard of living of the masses [at home], who
are everywhere half-starved and poverty-stricken, in spite of the amazing technical progress”21
— something Lenin thought impossible except for the narrow labor aristocracy.
The development of the “newly industrialized countries,” however, especially when compared
with recession in the West in the aftermath of the postwar boom, appears to fulfil Lenin’s
prognosis: as boom turns to bust, more and more industrial jobs are moving to low-wage labor in
the poor countries. Even so, the economic growth in these countries has been limited (as Lenin
expected). None of them has been able to approach the economic level of the advanced, and their
impressive statistics of increasing Gross National Product per capita in reality mask grossly
uneven incomes and grinding mass poverty. As one bourgeois expert summed up (with a degree
of euphemism that few besides practiced academics can muster):
“Not only have most developing countries experienced a decrease in the share of income
accruing to the poorest 60 percent, but in many, the relative decrease has been sufficiently
pronounced to result in declines in the absolute levels of the poor. At the same time, in the
political arena, the process of interaction between the social forces of modernization and the
existing power structure has led to varying degrees of instability and internal violence, as well as
to a general tendency towards less participatory forms of political structure; the latter has meant
that, at least temporarily, political power, as well as economic welfare, have become less equally
distributed. It has thus become clear that the economic development processes of the fifties and
sixties have not led to the intended result — massive improvements in the welfare of the poor —
but have, if anything, increased inequity.”22
The international debt crisis has sharply called into question the economic stability of the thirdworld countries. Because of the obligations to the banks — which third-world rulers consider
sacred and only postpone paying when they literally don’t have the cash — starvation and
disease are becoming even more rampant. The crisis also exposed the third world’s dependence
on the imperialist powers. Statistically, an expert noted that the industrialized countries “have
absorbed the resources of the rest of the world, and principally those of the developing
20. Lenin, Imperialism, the Highest Stage of Capitalism, Chapter 8. In expecting capitalist progress in the
colonies Lenin echoed Marx, who wrote of Britain dragging India forward but “through blood
and dirt, through misery and degradation” at the expense of the masses. (“The Future Results of
British Rule in India,” 1853; in Karl Marx on Colonialism and Modernization, S. Avineri, ed.)
21. Imperialism ..., Chapter 4.
22. I. Adelman, Journal of Development Studies, 1974. “Less participatory forms of political structure”
indeed! Liberals seem incapable of believing ill of ruling classes. Isn’t it apparent by now that
the “intended result” of imperialist investment and “aid” is precisely what Adelman describes
rather than what is piously preached?
countries.” Likewise, the head of the World Bank, hardly an opponent of imperialist
exploitation, observed that “The developing countries are transferring to the industrialized world
more money than they receive in new financing.”23
Figures compiled since the outbreak of the debt crisis explode the theory that imperialist
exploitation is not profitable. Here is what the combination of debt repayments plus capital flight
from the imperialized countries has meant:
“Since 1979 the most important debtors have devoted from 70 to 80 percent of the total of their
new borrowings to the payment of interest on their previous debts. This gigantic transfer of
resources from the periphery to the principle metropolitan capitalist countries has had a
spectacular effect: in 1981, for the first time in postwar history, the third-world countries have
become net exporters of capital. From 1981 to 1985, this flow has multiplied on the average by a
factor of 10, passing from 7 billion to 74 billion dollars.”24
However developed the third-world countries may be, their surplus value is still appropriated in
large measure by the imperialist powers. This results from the siphoning away of profits as well
as from unequal trade (Chapter 2). There is also the ominous trend of imperialists demanding
and getting property rights when cash repayments are not forthcoming. Lenin’s overall outlook
has proved correct: the rich countries get richer (with their masses benefiting in part), while the
poor remain poor and dependent.
One reason for the error in Lenin’s specific expectation that the masses at home would remain
“half-starved and poverty-stricken” is that the most modern production techniques require an
already developed economic and social environment and therefore have to locate in the advanced
countries. Another is the success of the revolution Lenin led: when the Soviet workers seized
power and expropriated capital, much of it foreign owned, the imperialists learned about the risk
of investing in potentially volatile areas. Only in the profits crisis after the postwar boom has
imperialism turned broadly toward industrial expansion in the third world.
THIRD WORLDISM
While social democrats hold that capitalism is no longer imperialist, the “third-worldist” school
believes that imperialism has totally transformed capitalism and its laws of motion. In the 1960's
this current was heavily influenced by the Chinese Communist Party’s conception of an
revolutionary struggle by the world’s “countryside,” the semi-colonial countries, against the
“city,” the advanced imperial powers. This was a more revolutionary line than the pro-Moscow
Stalinists’, who tried to limit every struggle to reforms. But it ignored the class struggle not only
within the capitalist centers but also within the semi-colonies. The theory’s roots lay in
bourgeois nationalism, not Marxism.
In the West third-worldism became the predominant view among a whole generation of leftists
23. U.N. Economic Commission for Europe, Economic Survey of Europe in 1987-1988; Barber Conable,
World Bank News, April 24, 1988. Both cited by F. Clairmonte, Le Monde Diplomatique, July 1988.
24. F. Clairmonte and J. Cavanagh, Le Monde Diplomatique, September 1986.
in the 1960's. Their mentor, Paul Sweezy, denounced the Communist Parties and the European
proletariat for having succumbed to imperialist bribery:
“During the long period of capitalist expansion after the Second World War, those Communist
parties which had been relatively most successful — the so-called Eurocommunist parties —
grew gradually more reformist. Today, a hundred years after Marx’s death, it is impossible to
make out a reasonable case for the view which had been for so long at they very heart of
Marxism, i.e., that the proletariat in the advanced capitalist countries is destined to be the agent
of revolutionary change.”25
Sweezy ignores history and logic: the CPs became reformist during the not-so-prosperous
1930's. But he is consistent with underconsumption theory: he and Baran credit the
transformation of modern capitalism to excessive surplus, which the system cannot absorb but
which nevertheless serves to eliminate periodic crises at the cost of stagnation and various social
diseases. Hence the permanent corruption of the workers and the conclusion that “the answer of
traditional Marxist orthodoxy — that the industrial proletariat must eventually rise in revolution
against its capitalist oppressors — no longer carries conviction.”
What really lacks conviction, however, is a theory that displaces the proletariat without
discussing the class struggle — and still styles itself Marxist. Baran and Sweezy willingly
acknowledge their “almost total neglect of a subject which occupies a central place in Marx’s
study of capitalism: the labor process.” Their excuse is that they uphold the “international class
struggle” and believe that the revolutionary initiative has passed to the “impoverished masses in
the underdeveloped countries.”26 This means, however, not the workers’ struggle in these
countries but rather the efforts of nationalist leaders to win breathing room from imperialism.
The international class struggle is indeed critical. But in the third-world countries, as elsewhere,
the proletariat is central to the socialist cause: only its material interests are fundamentally anticapitalist. Likewise, it is impossible for Marxists to dismiss the struggle in the advanced
countries, where the workers have greater economic power. As the permanent revolution
analysis shows, revolution in the imperialist countries is necessary, not only to disarm imperial
military power but also because without international socialism the ex-colonial countries will
never reach the economic level of modern capitalism, much less go beyond it.
It is an evasion of Marxism, not an updating, to overlook the effect that the capitalist crisis has
on the working class, forcing it into deeper levels of struggle. From the end of the postwar boom,
when the French and Italian workers exploded in nationwide class battles, to the 1980's, which
saw mass strikes across Europe from Britain to Poland and the USSR (not to speak of Iran, South
Africa, South Korea, the Philippines, Burma and China), the proletariat has signaled that it is
dissatisfied with conditions under capitalism. The task of Marxists is to join the struggles of their
class in order to show the way forward, not to treat them with “almost total neglect.”
Moreover, whole sections of the working class in the advanced world, like American black
25. Sweezy, “Marxism and Revolution 100 Years After Marx,” Monthly Review, 1983.
26. Baran and Sweezy, Monopoly Capital (1966), pp. 8-9.
workers, are vitally interested in and influenced by the struggles of the oppressed and exploited
abroad;27 the latter have also closely followed the U.S. black struggle ever since the early 1960's.
Baran and Sweezy cite only monopoly capital’s effect on the black “masses” in the U.S. without
specifying the significance of the black proletariat.
Despite the arguments of both social democrats and third worldists, the essentials of the Marxist
theory of the epoch of decay have been amply confirmed. The First World War opened up a
period of social revolutions beginning in Russia and spreading to Central Europe. The system
survived by relying on the forces of reformism, but it was not long before the world economy
collapsed in the Great Depression. And that was accompanied by the horrifying
counterrevolutions in Germany and Russia — followed by the renewed devastation and defeats
of World War II. The continued existence of capitalism, once the most progressive form of
society in human history, was made possible only by the most barbaric period the world has ever
seen — the “midnight of the century” of the 1930's and 1940's.
Today, narrowing wealth in the dominant countries coexists with mass misery in the greater part
of the globe. The build-up of fictitious capital threatens the imperialists’ economic stability as
well as the living conditions of the masses. The imperialists are virtually deserting whole areas
of the third world; despite the super-cheap labor there is too little infrastructure for profitable
exploitation. Even during the Pax Americana, wars and repression victimized the already
poverty-stricken countries. And if nuclear warfare has been suspended (not prevented: it was
used by the U.S. against Japan), its monstrous capacity for destruction still exists, threatening
and constricting all international politics. Nothing in the nature of the imperialist ruling classes
will stop them from using nuclear weapons when political and economic conditions leave them
desperate. The program of Marx and Lenin remains: only proletarian revolution offers a way out.
3. STALINIST IMPERIALISM
If Stalinism is a form of capitalism in the epoch of decay, then the dominant Stalinist country,
the USSR, must be imperialist as well as capitalist. This raises a question for our theory: if the
Soviet system is driven only to expand its national capital, in contrast to powers which export
capital, how then can it be imperialist in the Leninist sense?
As we will see, the standard state capitalist theories fail to deal with the nature of Stalinist
imperialism. On the other hand, opponents of state capitalist theories like Mandel and Sweezy
have difficulty accounting for the Soviet rulers’ years of domination over, and exploitation of,
nations within the Russian “prisonhouse” as well as their East European allies.
We will show that, just as internal economic relations within the Stalinist system can be
understood through the drive to maximize the national capital, so too can its external relations.
The relation between the USSR and its satellites is imperialist. Although not a simple copy of the
type described by Lenin, it is a product of the same capitalist tendencies at a later stage in their
27. See “The Black Struggle,” Socialist Voice No. 7, Fall 1978.
development. We will also show that Stalinist imperialism has changed significantly, even in the
less than half century of its existence. Although its isolation and weakness have dictated an
overall strategy of peaceful coexistence with the dominant West, Stalinism’s tactics have become
markedly less aggressive because of the nature of its economic decline.
THE IMPERIALISM OF BACKWARDNESS
At the height of Stalinism during the postwar years, the Soviet rulers had little compulsion to
export capital. Statified capitalism aims to expand the capital within its national boundaries; it is
therefore interested in foreign investments only insofar as they help towards this goal. Regional,
local and industrial bureaucrats are rewarded according to how they manage their plant or
bailiwick; they have had no incentive, and normally no opportunity, to invest abroad. Moreover,
they had little need to search for cheap labor abroad: they paid low enough wages at home. Their
problem was serious labor shortages due to low productivity, and their nationalist needs led them
to import even lower-paid workers from satellite countries with excess labor, like Vietnam.
But there is nevertheless an economic motivation for Stalinist expansionism. The bureaucrats are
forced to look abroad for use-values — new technology, minerals, food, etc. — to fill the
inevitable gaps in their domestic economy. This is because the Stalinist goal of national autarky
is an impossibility, especially for a country with the USSR’s notorious economic inefficiency.
The Soviet economy, devoted to the retention of every particle of value, nevertheless wastes and
destroys use values. The need to import use values inheres in the USSR’s relations of
production; it is not just a policy set by the rulers at particular conjunctures.
The USSR searches for use values abroad, in contrast to the values it seeks to build up at home,
as it does in the “second economy” of privately produced consumer goods which it depends on
internally. All use values have value, but this is not the criterion for choosing them. Financial
losses can be tolerated in the effort to obtain the missing use values, as long as the overall result
is to maintain the national capital and maximize its value. To this end, of course, the acquisition
of surplus value abroad will be undertaken if it does not conflict with the primary goal.
Let us look at the history of Soviet imperialism in this light. In the early postwar period the
Russian rulers had an additional motive: the restoration of the Soviet economy, even if at the
expense of other peoples. They utilized three basic methods of exploiting their satellites (as well
as China, before and after the revolution of 1949):28
1. On the pretext of obtaining war reparations, they stripped Eastern Europe, dismantling
factories and machines and shipping them home to the USSR. Even Manchuria, a province of
China, a wartime ally and victim of traditional imperialism, was looted in this way. Although the
Stalinist economy chewed up imported use values as it did domestic (machinery was destroyed
in transit, factories lay rusting by the wayside), and this meant a huge loss for the (Stalinist!)
rulers of the looted countries, it came at no cost to the Soviet rulers, and so continued.
2. The Soviets took over large enterprises previously seized by the German occupiers and
28. See Y. Gluckstein (Tony Cliff), Stalin’s Satellites in Europe (1952) and Mao’s China (1957).
declared them joint-stock companies, with property rights shared between the USSR and the
local ally. Profits were also shared, and a major portion went to the USSR for its efforts of
absentee ownership — in reality its rights of conquest.
3. Like any other occupying imperialist power, the Russians enforced unequal trade relations
with their satellites; charging high prices for Soviet goods and demanding cheap goods in return
— the use values it needed. Such exploitation was specifically cited by both Yugoslavia and
China when they broke with the USSR in 1948 and the 1960's, respectively.
The combination of all these methods obviously gained surplus value as well as use values for
the USSR. Two of the methods, reparations and joint-stock companies, were abandoned in the
1950's, in response to the conflict with Yugoslavia and the workers’ uprisings in East Europe
after Stalin’s death. As for unequal trade, whether it has continued has been much disputed. The
problem is that the Soviet-type economies don’t have even an approximate method of measuring
the true values of commodities; they end up using comparable Western prices, which may not
reflect actual production costs. The upshot appears to be that for many years (after the initial
looting) the USSR did accept trade losses with its satellites; in the mounting economic crisis of
the 1970's, however, it made sure that trade relations were tilted in its favor so that its losses
were lowered or even reversed. A special example is that the Soviets charged their allies far
more than the production cost for the vital commodity, oil, justifying their usury by the fact that
the world market price was even higher.
In relations with its satellites subsequently, the USSR has insisted on bilateral connections rather
than multilateralism — despite the founding of Comecon (the Council for Mutual Economic
Assistance). Attempts to establish direct links between sister “socialist” countries — PolandCzechoslovakia and Yugoslavia-Bulgaria — were blocked by Stalin, while Comecon encouraged
multinational autarky and dependence on the Soviet economy. Applying its use-value interests,
the USSR asserted the right to choose who produce what, to take first pick of quality goods, etc.
At times the Russians have subsidized some allies — East Europe in general for a period, Poland
after its military regime suppressed Solidarity in 1981 and the Polish economy remained in
crisis, and Cuba ever since it was accepted into the Soviet bloc. A clear indication of the USSR’s
imperialist weakness is its inability to adopt other third-world dependencies, notably Nicaragua,
and its pressing need to reduce the aid which is a major prop of the Cuban economy.
The USSR has also gains advantages over the more backward of its allies, as well as other “third
world” countries it trades with, by standard capitalist methods. As Marx pointed out, trade
between an advanced producer selling capital-intensive goods and a backward one selling laborintensive goods invariably favors the former, because fewer hours of high-productivity labor will
exchange for more hours of low-productivity labor. Equal monetary exchange masks unequal
exchange of values, just one of the ways that “equal exchange” under capitalism turns into its
opposite under the operation of its laws of motion.29
In the case of the USSR’s more industrialized satellites like East Germany and Czechoslovakia,
29. Marx, Capital Vol. III, Chapter 14.
however, the unequal trade relationship is reversed. In order to import necessary production
goods embodying advanced technology, Russia has to give up a greater value by exporting
minerals and other raw materials. Even though the USSR is militarily and politically dominant in
the region, its economic control is hindered by its own limited development. So it uses nonmarket methods, like requiring payment from its satellites in “hard” (Western) currency.
Hungary since 1985 has had to pay in dollars for its oil imports from the USSR. This is a sore
point, since not only the Soviets but all the Stalinist partners desperately need convertible
currency for imports.
In recent years Soviet economic domination has been aided by “joint investment projects”
undertaken with satellite countries to develop resources within the USSR. Unlike the alternative
of foreign investment, these projects are on territory controlled directly by the Soviet rulers.
They allow the USSR to import industrial use values of a quality superior to what is produced at
home. And they extend, by economic rather than purely military means, the USSR’s control over
its allies.
Joint investment projects began in the 1960's and expanded greatly in the 1970's. According to
the Hungarian economist Tibor Kiss, “the less developed countries of the bloc bear with
difficulty a 10 to 15% reduction in the volume of their industrial investments.”30 As one
academic expert noted about such projects, “The ownership benefits accrue to the USSR, which
is repaying the East European countries’ investment with a 2% simple interest rate, by delivering
to them agreed quantities of gas and pulp ...”.31 The East European partners also complained
about the high manpower costs they have to pay, in view of the low Soviet rates of
compensation, and about their burden of compulsory hard currency contributions. The
arrangement maintained their dependence on the USSR and expanded the Soviet national capital
at their expense.
The USSR has also turned more heavily to the exploitation of the internal colonies inherited
from Czarism’s prisonhouse of nations. In the two decades after 1958, production and personal
income in the non-European republics of the USSR grew proportionately slower than in Russia,
a change indicating a drain of surplus value toward the European sections of the country.32 This
helps account for the explosion of minority nationalism on the periphery of the USSR.
To sum up, the USSR will use almost any method to get the necessary use values: outright
looting as in postwar East Europe, loans for plant construction to be repaid in goods, traditional
capital investment, the joint investment projects, etc. Technology is undoubtedly the most
important missing use value, so new technology has to be acquired from the countries of
traditional capitalism. And much of the USSR’s other efforts abroad are aimed at obtaining
convertible Western currency with which to buy technology. As with Western imperialism,
international exploitation sets up a contradictory logic that inspires nationalist tendencies in the
satellites, tendencies that run counter to Soviet domination.
30. G. Graziani, “Dependency Structures in Comecon,” Review of Radical Political Economics, 1981.
31. P. Marer, “Soviet Economic Policy in Eastern Europe,” S.M. Terry, ed., Soviet Policy in Eastern
Europe (1984).
32. M. Spechler, “Regional Developments in the USSR,” p. 147; Soviet Economy in a Time of Change,
U.S. Congress, Joint Economic Committee (1979).
SOVIET IMPERIALISM AND LENIN’S THEORY
None of the methods of Soviet foreign exploitation described here depend on the export of
capital. They have a similar result — increasing the surplus value under Soviet control — but
their mechanism is different. Of course, there are examples of Soviet capital exported abroad:
bank loans to friendly countries (India, Egypt in the past), some investments by Soviet bank
branches abroad, and even a few traditionally capitalist investments in partnership with Western
firms. But these examples are not decisive. Any country has foreign investments, even poor
countries that no one would dream of labeling imperialist; it is the nature of capitalism to operate
internationally. These are not capital export in Lenin’s sense: a fundamental drive requiring
exploitation of other countries.
Some Stalinist states, like Yugoslavia (where the rulers’ attachment to the national capital is
rivaled by their provincial nationalism), do export capital for profit. The USSR therefore
represents one extreme on a spectrum running from Western state monopoly capitalism to the
hard Stalinist model. Today we are seeing drastic shifts along this spectrum as the crisis erodes
the illusion of “socialism in one country.”
Soviet imperialism retains many characteristics of backwardness. The USSR cannot hold on to
its dependencies through economic might. When pressed, it has had to resort to military force —
reluctantly, because that damages relations with the “democratic” imperialists whose capital and
technology the USSR still needs. Unlike traditional imperialists, the Soviets do not invest in their
dependencies; they first looted and now import capital from them. Soviet imperialism is the
reverse of Luxemburg’s (fallacious) model of imperialism, in which surplus value can be
realized only through the non-capitalist environment. The USSR needs a traditional capitalist
environment both inside and outside the country to nourish its nationalist pseudo-socialism.
Does a theory of capitalist imperialism not driven by capital export impermissibly stretch the
bounds of Lenin’s “definition”? Those who say so ought to consider the example of Czarist
Russia, one of the six major colonial-imperialist powers analyzed in Lenin’s Imperialism. Old
Russia, like the USSR, had an imperial history different from the leading powers’. Some of its
colonies (e.g., Poland and Finland) had a higher standard of living than Russia proper, as is true
of several East European satellites of the USSR today. Lenin described it as a country “where
modern capitalist development is enmeshed ... in a particularly close network of precapitalist
relations.”33 In particular, Czardom had little capital to export; foreign imperialists sent more
capital into Russia than Russia sent out, by far. Lenin’s chapter on the export of capital doesn’t
even include Russia as an exporter but does mention it as the recipient of massive imports of
French capital; three-quarters of Russian bank capital in 1913 belonged to branches of foreign
banks.34
Yet Czarism was imperialist in its own right and crucial to Western imperialism’s domination
over East Europe and the Russian empire. For Marx and Lenin, Czarist Russia was the main
blockade to progress in Europe and therefore the world. They both pointed out that Russia’s
33. Lenin, Imperialism..., Chapter 6.
34. Imperialism ..., Chapter 3.
atypical features — its autocracy and military foundation — enabled it to play a role in propping
up imperialism that even undemocratic capitalist powers had to forego. Soviet Russia also
functions to maintain world imperialist hegemony. The USSR today is not the same as the
Russia of 1913, but like Czarist Russia it has been an exceptional case within the realm of
imperialism — precisely because of its special characteristics. Lenin did not deny the Czar his
imperialist crown because his backward economy fell short of matching the famous “five
points.”
The claim that the USSR cannot be imperialist because it lacks one of the five points is a sterile
argument from pure form. After all, the traditional imperialist powers today (the U.S., Britain,
France, etc.) no longer territorially divide the world — thereby violating one of Lenin’s points.
The former colonial powers lost most of their overseas territories after World War II. The U.S. is
the world’s dominant imperialist — but hardly because of the few countries like Puerto Rico that
it rules directly.
To sum up, the USSR is imperialist despite the lack of capital export as a decisive feature: it
functions as a vital section of world imperialism, and it is an autonomous center of capital
accumulation with an internal drive to dominate other countries for economic purposes. It is
different from the traditional imperialist powers because of the peculiar nature of that drive,
resulting from its specific history as a destroyed workers’ state. Its imperialism is essentially
defensive, aimed at maintaining its position as a great power with the ability to bargain for
economic concessions from the West rather than aggressively seeking to contend for Western
holdings. Soviet imperialism plays a key role in accounting for the continuity of imperialism as a
whole to the present day, a longevity Lenin never expected.
ALTERNATIVE THEORIES
Most attempts to devise Marxist theories of Soviet imperialism have been unsuccessful. The first
worked-out “third-system” analysis of Russia was that of Shachtman, who for all his insistence
on the uniqueness of the Stalinist system, saw an essential similarity between Stalinism’s
imperialist drive and capitalism’s:
“The present world tends more and more to be divided into a few of the advanced and powerful
economic countries who enjoy independence, and the others that stagnate or retrogress
economically and inevitably fall into economic and then political dependency upon the few. For
a country (and the ruling class in it) to survive as an independent entity, in our time especially,
requires an extension of its economic (and therefore its political) power. ... In other words, for all
the social ... differences that mark her off from the capitalist world, Russia is nevertheless
confronted with the same problem and driven by the same impulsion as every other country in
the world.”35
Russia, said Shachtman, needs conquests for the exploitation of the conquered regions’ wealth
and its own military defense; it had an unlimited appetite for territory, limited only by the
35. Shachtman, “The Program of Stalinist Imperialism,” The Bureaucratic Revolution (1962), p. 123;
reprinted from New International (1943).
counterforce wielded by rival powers or the mobilization of the masses. But any world power
has the same drive, especially those motivated by the need for surplus value. Thus Shachtman’s
theory of bureaucratic collectivism offers the same explanation for Soviet expansion as for
capitalist expansion; it duplicates Cliff’s notion that what drives both capitalism and Stalinism in
the modern epoch is the need for use values, not value.
But Shachtman really did think Soviet Russia was different. It was backward and starved of
capital, and therefore had to conquer territories that were industrially more advanced (which is
why Yugoslavia and China were incompatible and allowed to escape the noose). This view
helped make the claim that Stalinism was a dynamic system with an unlimited capacity for
exploitation and looting — in contrast to capitalism, whose problem was not how to expand
production but rather how to dispose of its excess products.36 Here the underconsumptionist
theory of capitalist development is extended to its full anti-Marxist logic: capitalism is less
reactionary than Stalinism because its drive for brutal exploitation is at least bounded. This
reasoning helped pave the way for Shachtman’s adaptation to Western imperialism as the only
viable alternative to the unmitigated rapacity of Stalinism.
Cliff’s book on Russia was originally written in the 1950's and therefore could only discuss the
methods of Soviet imperialism in the immediate postwar period. He held that the backwardness
of the USSR drove it to conquer satellites in order to obtain cheap labor and to loot raw materials
and machinery.37 Since Soviet relations in this period were based on undeniable looting, this
seemed correct. But when circumstances changed, Cliff’s theory stood still. Later versions of the
book (including the 1988 edition with an updating “Postscript”) rehash the same limited
discussion, cutting the story short at about 1955. The problem of how the USSR could remain
imperialist since 1929 without a drive to export capital was never addressed. More recent works
by Cliff’s followers have added nothing substantial. The Cliffites’ indifference to a theory of
Stalinist imperialism is not surprising, since they have essentially abandoned such a theory for
capitalism in general, as we will see in Chapter 7.
Maoist theories of Soviet imperialism face an especially severe contradiction, since they deny
the blatant Soviet conquests of the post-World War II period when Stalin was still alive. Thus
they claim that the takeover of East Europe and parts of China in World War II, accompanied by
various forms of looting, was socialist — while the relatively compatible relations of recent
decades are imperialist! Most Maoists simply ignore the problem: Bettelheim’s summary of
Soviet foreign policy, for example, skips all the way from 1941 to 1953 without a word of
explanation.38 Then, for 1956 and after, Maoists try to prove Russia imperialist by claiming that
Lenin’s formulas now apply. One version holds that the USSR cannot yet afford to export much
capital and therefore must build up its nuclear weaponry in order to win a world war and become
the dominant power.39 This fantasy perfectly fits Maoism’s adaptation to U.S. imperialism.
A particularly convoluted Maoist argument runs as follows: 1) capital is a social relation; 2)
36. Hal Draper, “Stalinist Imperialism and the Cold War Crisis,” in Draper, ed., Introduction to
Independent Socialism (1963), pp. 104-106; reprinted from Labor Action (1954).
37. Cliff, Russia: A Marxist Analysis, Chapter 9; State Capitalism in Russia, Chapter 8.
38. Bettelheim, Les Luttes de Classe en URSS, Vol. 3, part 2.
39. Revolutionary Communist Party (U.S.), “Against the ‘Lesser Evil’ Thesis: Soviet Preparations
for World War 3,” Revolution (1984).
hence “export of capital” means the export of capitalist social relations; 3) since foreign trade by
the USSR with any capitalist country exports capitalist social relations, it is therefore
imperialist.40 This is just an extension to the domain of foreign relations of the Maoists’ standard
idealist conception that the class character of the USSR was transformed when Khrushchev made
an anti-Stalinist speech. The only virtue of such reasoning is its consistency with the notion that
socialism can be built in economic isolation. With arguments like this it is no wonder that
defenders of the Stalinist USSR have had an easy time refuting leftist theories of Soviet
imperialism.
DEFENSE OF THE SOVIET UNION?
The devil thesis of the Soviet Union shared by the right and some on the left is absolutely false:
the Soviet rulers are not driven to unlimited military expansion. (The momentous events of 1989
make this obvious, but it was always clear to authentic Marxists.) The reverse argument offered
by Soviet apologists that the USSR loves peace is also wrong. Some leftists who “defend the
Soviet Union” of today because of its proletarian past imagine that our analysis, in that it
distinguishes between the USSR’s less potent aggressiveness and the West’s, supports such a
line. But it does not: defending the USSR means defending its share of the world’s imperialist
booty, its “sphere of interest,” its internal empire.
Moreover, defending the Soviet Union means defending the division of the world in which the
key factor is Western domination. The USSR’s role in world imperialism is roughly analogous to
the Democratic Party’s role in U.S. capitalism: it associates itself with progress and peace in
order to betray the mass sentiments and movements for change (and whose struggles potentially
challenge the existence of the system). It is no accident that the most ardent defenders of the
USSR tend to line up in support of the imperialist Democrats and class-collaborationist popular
fronts.41
Even in a direct encounter between the USSR and a traditional imperialist power, victory for the
Soviets would mean not the end of imperialism but the strengthening of the victor’s hold,
military and economic. The U.S. is the more aggressive superpower, seeking more actively to
extend its sphere of influence. This is no reason to defend the other; and as we will see below,
coming imperialist realignments are likely to bring the USSR into alliance with other
imperialists.
The fundamental error of the defensist position is its confusion between a retrograde state and a
progressive one. “Soviet defensists” see the absence of capital export as a progressive aspect.
Indeed, the export of capital for the purpose of ingesting surplus value is reactionary; but it also
reflects the international scale of the modern economy and the overripeness of the world for
socialist transformation. Workers’ states in the advanced countries would also send vast amounts
of capital abroad — not because of the surplus value it could return but because of the use values
40. Progressive Labor magazine, Spring 1981 issue on “Soviet Capitalism,” pp. 41-47. The same
argument is given academic respectability in Patrick Clawson, “The Character of Soviet
Economic Relations with Third World Countries,” Review of Radical Political Economics, Spring
1981.
41. These include not just the CPs but even the rabidly but superficially anti-popular frontist
Spartacists. See Socialist Voice No. 14 (1981).
that less advanced workers’ states need. The USSR’s failure to export capital shows the severe
contradiction of a system at once advanced and backward in the extreme. As in the early years of
the century, Russia is again a glaring example of Trotsky’s “uneven and combined
development.”
The USSR’s role is defended by leftists who rebel against the Cold War propaganda of the West
by justifying Soviet behavior. For example, the radical journalist Alexander Cockburn justifies
the Yalta agreement of 1945 and the fact that “Stalin politically terrorized and economically
exploited Eastern Europe” by cynically remarking that “Germany had just claimed at least 20
million Russian lives. The shipment of factories, reparations agreed to by the Allies, seems a
rather genteel penalty.”42 That sounds good only in nationalist language. Restated in class terms
the logic is a bit less convincing: since Germany’s rulers had slaughtered more Soviet people
than had the Stalinists, it was only fair for the Stalinists to take revenge on German — and East
European — working people too. For precisely this reason the Bolsheviks excoriated the socialdemocrats’ acceptance of reparations demands by the conquerors after World War I. It is an
imperialist, not a socialist demand.
In sum, to defend the Soviet Union is to defend, whether in detente or Cold War, a fundamental
prop for the imperialist system as a whole.
STALINIST NATIONALISM
Led by Russia and China, the Stalinist bloc at its height encompassed a quarter of the globe and
ruled a third of the world’s people. But almost as soon as it reached its peak it showed visible
signs of distress — not only from the economic crisis that beset the entire capitalist world after
the postwar boom but also from internal tensions rending the bloc apart. This had a major effect
on inter-imperialist relations as well.
The East German working-class riots of 1953, the Polish upheaval of 1956 and the Hungarian
revolution in the same year unnerved not only the Stalinist rulers. John Foster Dulles, the
reactionary Secretary of State in the Eisenhower administration, stopped calling for the “rollback
of communism” in the face of the workers’ movements. The Hungarians confronting Soviet
tanks and creating workers’ councils were too dangerous a force. So the U.S. abruptly began to
advocate the more realistic “Polish road.”
This alternative, symbolized by the former Polish CP head Wladislaw Gomulka, began with a
reformist policy of limited concessions to the protesting masses. But it also included a careful
appeal to Polish nationalism. Gomulka understood that Stalinism could survive in Poland only
by winning some popular support, and that required an end to overt Russian domination.
Gomulka had no intention of driving the Soviets out of the country; on the contrary, he was
simply a national Stalinist who had won mass sympathy because of his victimization by
Moscow. Only through such a figure could the ruling party thwart the proletarian threat.
The road to this alternative had been paved by the Yugoslav break with the USSR in 1948. The
42. Cockburn, The Nation, March 9, 1985.
West learned then that nationalist Stalinists could oppose Soviet domination and open up their
countries to capitalist penetration. (Tito went so far as to endorse the U.S. imperialist side in the
Korean war.) The eruptions after Stalin’s death made such solutions much more urgent. After
1956 the Khrushchev regime mended relations with Tito, thereby establishing something like the
“50-50" split of influence over Yugoslavia envisaged in the Churchill-Stalin deal at Yalta.
In Hungary the Polish alternative failed. Nationalist Stalinists led by Prime Minister Imre Nagy
and military hero Pal Maleter were caught between duplicitous Soviet diplomacy and the
intransigent workers, and could not steer an independent course. As a result Soviet forces were
sent in to crush the revolution, and efforts to achieve “peaceful” accommodation between the
West and the USSR were set back for years.
The 1956 events threw into disarray the far left theories of Stalinism. In the case of the
Shachtman group, for all its fiery rhetoric about destroying Stalinism, its response to Hungary
was to concentrate on democratic demands rather than the socialist overthrow of the state. On a
deeper level, the conception that the producing class under Stalinism was not a true proletariat
faced a calamitous problem. Why, if they were not a proletariat, did the revolutionary workers
construct classical proletarian dual power institutions? Why did their demands strike against the
exploitation through value? Shachtmanism could not answer. Thus the workers’ revolts, along
with the break-up of the Stalinist monolith they compelled, undermined the theory that the
Stalinist system was a dynamic successor to decadent capitalism.
The rival “orthodox Trotskyist” current was also shaken by the workers’ revolts; it too tended to
adapt to the left Stalinists calls for democracy. We take up their theory in detail in Chapter 7.
The nationalist aspect of the uprisings against Soviet domination raises a fundamental question:
why did nationalism become so prominent if Stalinism has done away with capitalism? After all,
for Marxists the nation-state is not a supra-historical phenomenon: it arose in the capitalist epoch
of history as a product of the bourgeoisie’s needs to break down pre-capitalist obstacles to
accumulation, unify a territory large enough for capitalist commerce and develop a common
language. Likewise, national movements came into existence with the creation of nation states.
Nationalism in East Europe is not just an echo of a capitalist past but an essential component of
the anti-Stalinist struggles — because of the characteristics of Stalinist society. Indeed, the
specific weakness of Soviet imperialism — the fact that without significant capital export it
cannot provide even the semblance of benefits to its satellites — often made its rule more
nakedly oppressive than Western imperialism. The nationalism of the subject states infected even
the bureaucracies that had been carefully selected for loyalty to Moscow. Each state attempted to
build its own national economy beyond the point of “rationality”; this reflected not only the
USSR’s interest in keeping them apart but also the national bureaucrats’ interest in building their
own power base even at the expense of their “comrades” across the border.
Stalin instigated purges in each of the East European dependencies to eliminate powerful
bureaucrats deemed to be “Titoists” and disloyal; Jewish officials were particularly targeted in
the hope of stimulating pro-Russian national chauvinism. But even a reign of terror could not
suppress nationalism. It spread further: to China, Vietnam and Cambodia in the 1960's; to
Romania and Czechoslovakia, where it got out of hand in 1968; to all the Stalinist states,
including the Soviet republics, today. In the West, “Eurocommunism” flourished within the CPs,
a deepening of the centrifugal forces Trotsky had pointed to long before. Despite the right-wing
“evil empire” and left-wing “post-capitalism” theories, the Stalinist bloc has suffered as many
political confrontations and squalid wars as any other Balkanized group of states generally
accepted as capitalist. And today rampant nationalism is ripping the USSR apart.
Nationalism, however, does not answer the needs of its mass following. It is no coincidence that
it has been consciously used as a diversion from the class struggle. Just as Moscow has little
choice but to try to ride the wave of anti-Russian movements, the Western authorities too prefer
it as a wise alternative to proletarian revolution. But nationalism is a two-edged sword. The West
has openly stepped in to support Gorbachev in trying to check the dismemberment of the USSR,
in the interest of world stability.
EMPIRE IN RETREAT
When world crisis conditions resurfaced at the end of the 1960's, the Stalinists needed help to
contain their potentially restive populations. They were compelled to break out of their bloc’s
relative isolation and become an integral part of the world economic structure. All the countries
of statified capital, including even ultra-isolationist North Korea, increased trade and embarked
on joint production deals with Western firms. Their plan was to expand intensively by importing
Western technology and to pay for it by exporting raw materials along with goods produced with
the imported techniques.
Because the economies of their own bloc were also worsening, Western financiers were eager to
grant loans to the East. They expected that Stalinist discipline over the workers, especially
prohibitions on strikes, would allow sufficiently high exploitation to guarantee profitable
repayment.
Reality, including Stalinism’s inherently retarded productivity and the deepening economic
crisis, decreed otherwise. The Eastern bloc increased not its manufacturing exports but its state
debt to the West, which mounted tenfold in the decade from 1971-81. As a result, the East, like
the third-world South, still imports manufactured goods from the West and exports mainly raw
materials. It also exports manufactures of lower quality to the South in exchange for raw
materials and convertible currency, which is in turn used to help pay for its trade deficit with the
West. Although militarily comparable with the West, the Soviet bloc (now minus China) cannot
compete effectively on the world market either with the Western powers, which have higher
productivity, or with third-world countries, which have lower labor costs.
The internal decline of Stalinism was a problem for the West. Henry Kissinger, who directed
U.S. foreign policy in the early 1970's, hoped to build a Holy Alliance to repress the wave of
revolution threatening to engulf the world. The hub of his policy was to maintain American
superiority by binding together the imperialist states of West Europe, North America and Japan.
This meant trying to overcome their rivalries (in which the U.S. was losing ground) in order to
hold their grip over the semi-colonial countries. This core alliance rested on regional junior
partners like Iran, South Africa, Brazil and Israel to police the third world.
The end of the Vietnam war in 1975 enabled Washington to cut its losses and hold the rest of the
imperial structure intact. It also permitted friendly relations with China and “detente” with
Russia. The Soviet rulers, however, did not accept Kissinger’s absolute attachment to the status
quo. To make sure that their own interests were not bypassed, they demanded a senior
partnership in stabilizing key regions like the Middle East. They also backed troublesome
leaders — Assad in Syria, Qaddafi in Libya and Arafat in Palestine — as bargaining chips for
entry into the world partnership. The Soviets never achieved their hopes, but they still held to the
bargain and defended the imperialist system as a whole. Wherever they aided anti-imperialist
struggles, as in Angola or Nicaragua, they did so to protect their own interests and to prevent
bourgeois-democratic revolutions from becoming proletarian socialist ones.
The Stalinists’ weakness became a problem for the West as well because the Soviet threat could
not so readily be used to weld the Western bloc together. Fear of the Russian devil no longer
made militant workers cringe from confrontations with their bosses. Nor could the collaborative
Western Communist Parties be painted as conspirators behind every domestic ill. As well,
revolutionary nationalist struggles now exploded without the restraining hand of Moscow
holding them within safe bounds. And by the mid-1970's working-class unrest in East Europe
was widespread once more. As Kissinger’s lieutenant, Helmut Sonnenfeldt, put it, “The Russians
are lousy imperialists.”43
Western foreign policy had to deal with a wide array of problems. The economic crisis
undermined American hegemony, leading to German leadership in Western Europe and a
revived Japanese sphere of economic domination in Asia. The “trilateralism” of Jimmy Carter
and Zbigniew Brzezinski was designed to maintain the U.S. as Western leader and policeman,
under conditions where Germany and Japan had to consciously take a back seat. This was a
temporary strategy, impossible for the long term.
Carter revived the old American strategy of “democracy.” He sought to contain the rising
worldwide class struggle by forcing the most oppressive regimes of the Western bloc — South
Africa, Chile, Somoza’s Nicaragua, Iran — to accept a more benevolent facade. The adoption of
pluralist systems was aimed at shoring up bourgeois rule by incorporating middle-class
dissidents (including blacks in South Africa) and thereby buying off the leadership of the mass
base of revolt.
Towards the USSR, where Kissinger had simply tried to prop up the old order, Carter and
Brzezinski tried to force reforms on the stubborn Stalinists through their “human rights”
campaign. They recognized that Stalinism had lost its ideological attraction and was running the
risk of a destabilizing revolt. In the Helsinki accords the U.S. officially recognized East Europe
as Moscow’s fief in exchange for promises of loosening up its economic and social structure.
Thus Carter sent aid speedily to the reformist Gierek regime in Poland in the face of workers’
revolts in 1976. His U.N. spokesman Andrew Young summed up the strategy towards Stalinism:
“My feeling is that as the Russians begin to evolve, they’re going to have more problems rather
than less. The fact that we are helping them deal with these few dissenters right now will prepare
43. See “Permanent Revolution in Southern Africa,” Socialist Voice No. 1 (1976).
them down the road to deal with a massive generation of dissent which is probably not ten years
off in the Soviet Union.”44
Young was insightful about the Stalinist future but far less so about the ability of the rulers, East
and West, to contain discontent. The straw that broke the back of the “human rights” campaign
was the overthrow in 1979 of the Shah of Iran, the strong-man of pro-Americanism in the third
world. Here Stalinism could not detour the masses; its ideological collapse had discredited
“Marxism,” i.e., national pseudo-socialist capitalism. As a result the revolt was channeled to a
rival answer to the horrors of oppression: “anti-imperialist” religious fundamentalism developing
into national-chauvinist clerical fascism. Another Carter effort also collapsed, the attempt to
integrate the Nicaraguan rebels into a reformed Somoza regime. A new turn was obviously
needed.
IMPERIALIST REALIGNMENT
When bourgeois reforms fail, the alternative is war-mongering. The Soviets provided the
opportunity by invading Afghanistan. They expected few problems because their aims coincided
with those of imperialism overall: the stability of the Middle East and the Gulf. Brezhnev
assumed he had a deal whereby the Americans would take care of Iran and the Russians would
handle Afghanistan. But the strategy backfired.
The second Cold War was initiated under Carter but it brought Ronald Reagan to power, since
the U.S. bourgeoisie demanded a tougher line. At home it was more guns and less butter, to show
the working class who was boss. Economic embargoes over Afghanistan and Poland put
increased pressure on the beleaguered Stalinist economies. The U.S. armed and aided
counterrevolutionary movements against left-leaning regimes across the globe: Nicaragua,
Angola, the Vietnam-imposed government of Cambodia, as well as Afghanistan. And to a degree
it worked. Reagan’ team understood what the liberals and left did not: that military/economic
competition would further weaken the USSR’s already crisis-ridden economy. Reagan’s
economic war further undermined the U.S. economy, continuing its transition to “first among
equals” from hegemonic power. Japan and Europe had to invest in a declining U.S. to keep the
West intact.
Even during the revived Cold War, Western capital continued to worry over the instability of the
Soviet bloc. Margaret Thatcher aside, the West European leaders were always less than devoted
to the Moscow-as-devil line, preferring profitable relations with East Europe. The U.S. deepened
its relations with China in the interest of finding cheap labor and of keeping up pressure on the
Russians. But with the Soviet threat declining and traditional imperialist rivalries growing, it
needed openings with East Europe too. After General Jaruzelski’s military suppression of the
workers’ movement in Poland (see Chapter 8), an important organ of U.S. imperialism evaluated
the alternatives according to the dictates of exploitation:
“The imposition of military control in Poland could in the long run be reassuring to Western
44. For details of the Carter strategy, see “Jimmy Carter’s New New South: the World,” Socialist
Voice No. 4 (1977).
creditors, if it provides greater economic stability, an end to labor unrest and increased worker
productivity — even at the point of a bayonet. But in the short run there isn’t any guarantee this
will happen, and the uncertainties could make all Western lenders more nervous about
continuing to bail out the Poles.”45
Soviet economic weakness soon led to a crisis in Cold War ideology: you can’t have a devil
without horns. Since the “evil empire” wasn’t playing its part, Reagan could not continue
blaming the Soviets for “all the unrest that is going on,” as he had done in his 1980 campaign.
The Cold War floundered, and a new enemy had to be invented. Hence the campaign against
“international terrorism” in which thousands of third-world victims have already been
slaughtered. But even such enemies as Qaddafi, Khomeini and Castro are unbelievable as
omnipotent sources of evil without Soviet power behind them. The “war on drugs” dragged up to
fill the gap is also a poor substitute, although it does allow U.S. imperialism to deploy its forces
against unrest in third-world countries.
When Gorbachev took power, his keen perception of the Soviet emergency led to an all-out
effort towards accommodation. Even more than before, the USSR needed credits and technology
from the West; its eagerness for peace was palpable. Soviet policy shifted toward a deal with the
West, hoping for settlements in Afghanistan and elsewhere and a common effort to prevent the
Iraq-Iran war from getting out of hand. Gorbachev’s diplomacy successfully used the differences
between Europe and the United States and played on the Western public’s peace sentiments. His
efforts made Reagan’s dilemma all the more apparent and led to the more or less official end of
Cold War II in December 1987, when the two superpowers staged a week-long lovefest at the
Washington summit conference.
Part of the deal was the Soviet pullout from Afghanistan, the settlements in Angola and
Cambodia and the Arias peace plan for Central America. But as Lenin said of similar diplomatic
deals in his day, the imperialists’ alternative to war is imperialist peace — which leads to
imperialist war. The Soviet Union has been the natural enemy since World War II. But the world
situation is rapidly changing. It is becoming increasingly clear that the U.S.’s major rivals today
are its economic competitors, Japan and Germany. Despite every administration’s attempts to
preserve the U.S.’s traditional international alliances, the bourgeoisie is increasingly compelled
to undertake jingoist, protectionist policies against its real targets.
All this points toward a rearrangement of imperial blocs, as happened at the start of World War
II. If world war is staved off for a time, the U.S.’s main enemy will not be the USSR but
Germany or Japan, or both. New imperialist rivalries would undoubtedly manifest themselves
through quarrels over the Middle East and other prime regions for exploitation, such as China or
the more industrial Soviet-East European region. In this case the USSR would serve as a junior
economic partner of one side or the other (as in the last world war); its nuclear and conventional
armed forces would serve as its most valuable bargaining counter.46
45. Wall Street Journal, December 16, 1981.
46. Such a shift is obvious now in the era of Gorbachev, but we pointed to it well before, at the
height of Cold War II. See “Marxist Response to Reaganism,” Socialist Voice No. 13 (1981) and
“LRP Convention,” No. 18 (1983).
The 1987 stock market crash prompted a leading Wall Street and Democratic Party power broker
to overstate graphically the changing world balance of power:
“Here we and the Soviets are spending so much money on defense and nuclear weapons while
the Japanese are winning World War III without one nuclear warhead. We are becoming a
second-rate economic power and the Soviets a third-rate economic power, and the two countries
that are first rate, Japan and West Germany, are without any real military strength. That is
absurd.”47
So it is, and therefore the direction of bourgeois policy on all sides will be to correct the
imbalance. Japan will militarize more than it already has, the U.S. will seek to overcome its
economic flabbiness through a serious austerity policy, and Germany will try to extend its
Ostpolitik of economic and political ties with the East European Stalinists. There is talk in high
places of a new “Marshall Plan” for Eastern Europe, allowing investment in those anemic
economies in order to both extract profits and forestall revolt. Starting in 1988, a parade of
Westerners marched to Moscow to offer loans and investments. The U.S. too began moving in
on Poland and Hungary. After the revolts of 1989, the parade became an avalanche. But the postboom economic conditions of world capitalism do not permit the same level of aid for recovery
that was possible in the 1940's.
For several decades, Stalinism and its ideology of nationalization served capitalism well. It was
the bulwark against revolution in Europe; it channeled the upheaval in China into a nationalist
dead-end; it persuaded the workers and peasants in innumerable third-world revolutions that the
national bourgeoisies shared their interests; it was a reformist prop for capital in the imperial
countries. But all that has changed. The USSR cannot even support the disintegrating economies
of its traditional satellites, much less new ones. It has always refused to do for the pro-Stalinist
rulers of beleaguered Nicaragua what it does for Cuba,48 and in the late 1980's it started backing
away from East Europe too.
The rulers of East and West face an overwhelming dilemma: they need a full-scale cathartic
crisis to wipe out obsolete capitals and centralize their economies to re-establish profitability.
But the size of the enterprises that would have to undergo the cure is so great that collapse
cannot yet be risked: not only are its economic effects unpredictable, but so is the response by
the working classes. And the collapse of the East European regimes shows that crisis
containment is not entirely under ruling-class control. Since the system can afford very few
liberal reforms, economic forces will continue to build to a greater crisis. The major economic
strategies of the 1980's — nationalist reforms in the East, protectionism in the West — are
stopgap measures in lieu of a real revival. That will require far deeper inroads into working-class
47. Felix Rohatyn, quoted in New York Newsday, November 12, 1987.
48. As our corollary to permanent revolution explains, Stalinist parties cannot carry out their
statification goals without first crushing or at least decapitating the working class. We pointed
out at the dawn of the revolutionary regime that Nicaragua could not follow the Cuban road,
because of the Soviets’ reluctance to intervene in the U.S.’s “backyard,” their own diminishing
resources and the decay of local Stalinism as a force capable of attracting and thereby
disciplining revolutionary workers. See Socialist Action (LRP), September 1979.
living standards than have yet been possible, and East Europe is the first testing ground.
The weakness of Stalinism does not mean that its futile reformist programs are harmless. They
can lay the basis for fascism again, since the capitalist solution for another sustained upswing is
a bout of violent defeats of the working class and a new centralization of capital. While
Stalinism can no longer provide the cadre to accomplish the stiffening capitalism needs, fascism,
based on distorted hopes for a radical alternative channeled through a program of racist and antileftist violence, potentially can. (The Iranian regime of religious fundamentalism already offers a
model.) If reformists and Stalinists deflect the working classes from revolutionary solutions they
would share the responsibility for such a defeat. Today, the question of proletarian revolution is
being posed most sharply in the Stalinist countries themselves.